Mondi: plans to cover all concerns
The Mondi of today would never have featured in the wildest dreams of the Anglo American executives who set up the company back in 1967.
Mondi has been remarkably busy since the demerger from the corporate mother ship in 2007, making acquisitions in Russia and a variety of countries in Eastern Europe that would have the amateur geographer scratching the head. The company now employs about 26,000 people at 100 production sites in more than 30 countries, and has become a properly global player in packaging.
Its latest interims show a distinctly tidy performance despite increasingly challenging trading conditions.
It achieved higher average selling prices, its capital investments and acquisitions chipped in and the forestry fair value was up. These factors more than made up for the impact of planned maintenance, lower volumes in certain areas and higher costs. Capital investment is being employed in areas such as the $335m modernisation of its Kraft paper facility in the Czech Republic, and the company reports good progress in its other projects.
The problem for the sector as a whole is that whenever the subject of packaging meets the public eye, it is in the context of devastating environmental impact. The trend will be to minimise the use of unnecessary packaging, particularly in areas such as single-use plastics where there are alternatives. But the environmental issue also creates an opportunity for operators that embrace it, and Mondi says it’s in a unique position to support its customers’ sustainability goals.
ArcelorMittal SA: worries and a sea of troubles
According to the book Exodus, the God of Israel inflicted 10 plagues on Egypt to force Pharaoh to release the Israelites from slavery. It included turning the waters of the Nile into blood, shipping in squadrons of frogs, gnats and flies, festering boils all round, locusts galore, darkness and the death of every firstborn son.
This may well have put Pharaoh in a mental state not entirely unfamiliar to executives of ArcelorMittal SA, who may not even be that surprised if a plague of locusts starts moving down the streets of Vanderbijlpark.
The company’s interim announcement is a tale of woe on many a front, summarised by the powerful trifecta of weaker international steel prices, increasing primary raw material costs, and lower demand — never a combination to make a pretty impact on the bottom line.
Then there are the challenges particular to SA, with the first quarter accounting for the biggest economic contraction in a decade and with apparent steel consumption at the lowest level in 10 years.
There is also the flood of imports from China, Russia and Taiwan, 18% higher in the interim period and now accounting for 20% of SA’s apparent steel consumption.
The group can’t compete internationally, as a result of increases in electricity and port and rail tariffs, which have added costs of R168m in the period. Iron ore prices are up 28% and steel prices down 13%.
The group is hoping international steel prices may pick up and raw material prices soften, but this is a company under real pressure.
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